Water Footprint Labelling and WTO Rules

• Published date: 01 November 2014
• Date: 01 November 2014
• DOI: http://doi.org/10.1111/reel.12090

Water Footprint Labelling and WTO Rules

Laura Manson and Tracey Epps*

A water footprint is a concept that measures the total

volume of freshwater used to produce a product, mea-

sured over the full supply chain. This article discusses

one idea that has been mooted to ameliorate impend-

ing freshwater shortages – namely to encourage con-

sumers to purchase products with a low water

footprint by using a water footprint label. A label may

provide sufficient incentive for consumers, and gov-

ernments may impose measures such as taxes or

import restrictions based on the water footprint. The

article explores the international trade law implica-

tions of such measures and finds that, as with other

areas of environmental regulation, international

trade liberalization and the protection of sustainable

freshwater resources are not incompatible goals.

However, water footprint labelling, and other associ-

ated measures, could have inadvertent trade law

implications, meaning that it will be important for

governments to give careful thought to their design

and application.

INTRODUCTION

International trade in water takes place in various

physical guises: in consumable form, either as bottled

water, or in other water-based drinks; and in bulk.

However, such physical transfers of water occur only

on a very small scale.1Of far greater practical signifi-

cance is international trade in products with a sub-

stantial ‘virtual water’ content. The concept of ‘virtual

water’ refers to the amount of water used in the pro-

duction of a good or service, and trade in ‘virtual

water’ has been identified as presenting significant

opportunities to enhance water use efficiency, particu-

larly in agriculture, and to address global and regional

imbalances in water availability.2As freshwater

scarcity becomes an increasingly pressing issue, a key

question that arises in considering how to encourage

trade and consumption of water-intensive products in

the ‘right’ direction is one relating to transparency –

namely, how do we know the virtual freshwater

content of any given product? An intriguing option

that has been mooted is to develop a water footprint

label that would assist in facilitating sustainable water

use by acting as a signal for the virtual water content

of products. Such a label would form the basis for

more well-informed consumer purchasing decisions,

and also more well-informed governmental policy.

Governments could implement water footprint label-

ling in an attempt to address freshwater scarcity

through discouraging trade and consumption of goods

with high virtual water content. They may also impose

taxes and import restrictions based on the label (i.e.,

adopt ‘trade-related water measures’). This article will

explore the international trade law implications of

such measures. It first sets out further background in

relation to freshwater scarcity, explaining why it is an

issue of no less significance than, for instance, climate

change. The article next considers the types of mea-

sures that governments might use to change consumer

behaviour, before examining such measures in light of

international trade rules.

FRESHWATER SECURITY,

‘VIRTUAL WATER’ TRADE AND

THE ‘WATER FOOTPRINT’

CONCEPT

Freshwater security3is one of the most pressing issues

on today’s global agenda. A rapidly growing population,

*Corresponding author: Tracy Epps.

Email: tracey.epps@mfat.govt.nz.

1This article will not attempt to discuss the trade that does occur, or

the related complications, such as whether water can be considered

a ‘good’ under international trade rules (e.g., there has been debate

as to whether water constitutes a ‘good’ under the North America

Free Trade Agreement and is therefore subject to the agreement’s

prohibition on export restrictions, or similarly, whether water can be

classif‌ied as a ‘good’ under the General Agreement on Tariffs and

Trade (GATT)); or the various instances of bulk water trade between

countries (e.g., between Singapore and Malaysia, or – in at least one

instance – between France and Spain).

2The concept of ‘virtual water’ was conceived by Professor Tony

Allan. See J.A. Allan, ‘Fortunately There are Substitutes for Water:

Otherwise Our Hydro-political Futures would be Impossible’, in: Over-

seas Development Administration (ed.), Priorities for Water

Resources Allocation and Management (Overseas Development

Administration, 1993), 13; J.A. Allan, ‘Overall Perspectives on Coun-

tries and Regions’, in: P. Rogers and P. Lydon (eds.), Water in the

Arab World: Perspectives and Prognoses (Harvard University Press,

1994), 65. See also D. Waughray (ed.), Water Security: The Water-

Food-Energy-Climate Nexus: The World Economic Forum Water Ini-

tiative (Island Press, 2011), at 69; and A. Gowlland Gualtieri, Legal

Implications of Trade in ‘Real’ and ‘Virtual’ Water Resources (Inter-

national Environmental Law Research Centre, 2008), found at:

<http://www.ielrc.org/content/w0802.pdf>.

3‘Water security’ refers to the capacity of a population to sustainably

provide adequate quantities of acceptable quality water for health,

livelihoods and development. See D. Grey and C. Sadoff, ‘Sink or

Swim? Water Security for Growth and Development’, 9:6 Water

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Review of European Community & International Environmental Law

RECIEL 23 (3) 2014. ISSN 2050-0386 DOI: 10.1111/reel.12090

© 2014 John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.

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